Income tax Dates
From 1 April 2024, multi-year backdated lump sum payments of compensation and for personal service rehabilitation from the Accident Compensation Corporation (ACC) will show as a new income type in myIR.
Multi-year backdated lump sum payments
Multi-year payments of compensation and for personal service rehabilitation cover more than 1 tax year. ACC pays them as a backdated lump sum.
How ACC will tax a multi-year backdated lump sum payment
Multi-year payments get taxed separately from the other income you receive in the year that ACC makes the payment.
The lump sum payment is usually taxed at your average tax rate for the past 4 tax years. We will provide ACC with the appropriate average tax rate.
Other backdated lump sum payments
Other backdated lump sum payments from ACC do not cover more than 1 tax year.
How other backdated lump sum payments will be taxed
We:
- look at your earnings over the past 4 weeks up to when the backdated lump sum is due to be paid
- take this 4 weeks’ pay and times it by 13 to work out what your yearly earnings would be
- then add the lump sum to that amount and work out how much tax and ACC to deduct.
End of year income tax obligations
Both multi-year and other backdated lump sum payments will be in your annual income tax assessment.
When we work out your tax for you: income tax assessments
Request for more information - income tax assessment
If you also earn other income you need to pay tax on, such as rental or shareholder salary, you will need to file an individual income tax return instead.
Individual income tax return - IR3
KiwiSaver
You do not have to contribute to your KiwiSaver from your backdated lump sum payment from ACC. It is an option you can discuss with ACC.
Employee contributions to KiwiSaver
Working for Families, child support and student loans
If you get Working for Families payments, pay or receive child support, or have a student loan they may be affected by the backdated lump sum payment from ACC.
Working for Families
If you receive weekly or fortnightly payments of the minimum family tax credit, in-work tax credit, or the Best Start tax credit for a child over 1 years old, then you must contact us to adjust your income.
You can do this in myIR, call us, send a message in myIR or send us a letter.
Adjust your income for Working for Families and student loans
If you were paid by the Ministry of Social Development (MSD) when it should have been an ACC backdated lump sum payment, you should contact us. We can then work out if you can get in-work tax credit.
Working for Families and Best Start - contact us
Child support
If you are a liable parent or a receiving carer, you may need to estimate your income.
Estimating your income for child support
If you are a liable parent or a receiving carer and have already estimated your income this year, you need to contact us.
Student Loans
If you live in New Zealand you may need to pay back some of your Student Loan from your ACC backdated lump sum payment.
Repaying my student loan when I am self-employed or earn other income
If the ACC backdated lump sum payment is more than $8,333 you may have to make interim payments.
Interim student loan repayments
If you think you should not have to make interim payments,you can look at estimating your repayments or contact us.
How to estimate your interim repayment in myIR
It is important that you contact us if you have any questions, especially if you have to pay back your Student Loan when you normally do not need to.